<SUBMISSION>
<ACCESSION-NUMBER>0001175710-06-000107
<TYPE>6-K
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20060424
<FILING-DATE>20060424
<DATE-OF-FILING-DATE-CHANGE>20060424
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ASPEN GROUP RESOURCES CORP
<CIK>0001023947
<ASSIGNED-SIC>1382
<IRS-NUMBER>980164357
<STATE-OF-INCORPORATION>A6
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>6-K
<ACT>34
<FILE-NUMBER>001-13509
<FILM-NUMBER>06775657
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE NORTH HUDSON
<STREET2>SUITE 1000
<CITY>OKLAHOMA CITY
<STATE>OK
<ZIP>73102
<PHONE>4052788800
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE NORTH HUDSON
<STREET2>SUITE 1000
<CITY>OKLAHOMA CITY
<STATE>OK
<ZIP>73102
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>COTTON VALLEY RESOURCES CORP
<DATE-CHANGED>19960930
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>aspen6k.htm
<DESCRIPTION>ASPEN GROUP RESOURCES CORP
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
<META NAME="author" CONTENT="Daniel Miller">
<META NAME="date" CONTENT="08/12/2005">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<A NAME="DocsID"></A><P style="line-height:14pt; margin-top:5pt; margin-bottom:5pt; font-size:12pt" align=center><FONT FACE="Times New Roman" COLOR=#000000><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></FONT></P>
<P style="line-height:16pt; margin-top:5.85pt; margin-bottom:5.85pt; font-size:14pt" align=center><B>FORM 6-K</B></P>
<P style="line-height:13pt; margin-top:4.6pt; margin-bottom:4.6pt; font-size:11pt" align=center><B>Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934</B></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>For the month of April 2006</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Commission File Number: &nbsp;0-28814</P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>Aspen Group Resources Corporation</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>One North Hudson, Suite 1000</P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>Oklahoma City, Oklahoma 73102</P>
<P style="margin-top:0pt; margin-bottom:12pt" align=center><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Form 20-F<U>&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp; </U>Form 40-F ______</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt" align=center>Yes _____ No <U>&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp;</U></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>If &#147;Yes&#148; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________</P>
<P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>INDEX</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">The following documents are filed as part of this Form 6-K:</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR><TD width=66></TD><TD width=354></TD></TR>
<TR><TD valign=top width=88><P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><U>Exhibit</U></P>
</TD><TD valign=top width=472><P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt"><U>Description</U></P>
</TD></TR>
<TR><TD valign=top width=88><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt" align=center>99.1</P>
</TD><TD valign=top width=472><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt">Annual Financial Statements for Period Ending December 31, 2005</P>
</TD></TR>
<TR><TD valign=top width=88><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt" align=center>99.2</P>
</TD><TD valign=top width=472><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt">Management&#146;s Discussion &amp; Analysis</P>
</TD></TR>
<TR><TD valign=top width=88><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt" align=center>99.3</P>
</TD><TD valign=top width=472><P style="line-height:14pt; margin-top:6pt; margin-bottom:0pt; font-size:12pt">Certificates</P>
</TD></TR>
<TR><TD valign=top width=88>&nbsp;</TD><TD valign=top width=472>&nbsp;</TD></TR>
<TR><TD valign=top width=88>&nbsp;</TD><TD valign=top width=472>&nbsp;</TD></TR>
<TR><TD valign=top width=88>&nbsp;</TD><TD valign=top width=472>&nbsp;</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:12pt" align=center><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt; page-break-before:always" align=center><B>SIGNATURES</B></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; text-indent:72pt; font-size:12pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:12pt; font-size:12pt">Date: April 19, 2006</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:24pt; padding-left:216pt; font-size:12pt"><B>Aspen Group Resources Corporation</B></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:216pt; font-size:12pt">By: &nbsp;</P>
<P style="line-height:14pt; margin:0pt; padding-left:216pt; text-indent:36pt; font-size:12pt"><U>/s/ Robert Calentine</U></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:216pt; font-size:12pt">Name:</P>
<P style="line-height:14pt; margin:0pt; padding-left:216pt; text-indent:36pt; font-size:12pt">Robert Calentine</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:216pt; font-size:12pt">Title</P>
<P style="line-height:14pt; margin:0pt; padding-left:216pt; text-indent:36pt; font-size:12pt">Chief Executive Officer</P>
<P style="margin:0pt"><BR>
<BR></P>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>f2005yeaspengroupfinstatemen.htm
<DESCRIPTION>2005 AUDITED STATEMENTS
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>Aspen Group Resources Corporation</TITLE>
<META NAME="author" CONTENT="Prospect/Cubacan/Endeavor">
<META NAME="date" CONTENT="03/29/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><FONT FACE="Times New Roman" COLOR=#000000><B>ASPEN GROUP RESOURCES CORPORATION</B></FONT></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><B>AND SUBSIDIARIES</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><B>CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><B>AND REPORT OF INDEPENDENT</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><B>CERTIFIED PUBLIC ACCOUNTANTS</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=center><B>DECEMBER 31, 2005 AND 2004</B></P>
<P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt"><B>ASPEN GROUP RESOURCES CORPORATION</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt"><B>AND SUBSIDIARIES</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt"><B>CONTENTS</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; text-indent:410.6pt; font-size:11pt">Page</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">Report of Independent Certified Public Accountants</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:426.5pt; font-size:11pt">1</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; font-size:11pt">Consolidated Financial Statements</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Balance Sheets</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:426.5pt; font-size:11pt">2</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Operations and Comprehensive Loss</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:426.5pt; font-size:11pt">3</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Changes in Stockholders&#146; Equity</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:426.5pt; font-size:11pt">4</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Cash Flows</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:426.5pt; font-size:11pt">5</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Notes to Consolidated Financial Statements</P>
<P style="line-height:18.5pt; margin:0pt; padding-left:36pt; text-indent:411.85pt; font-size:11pt">6-22</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt"><B>REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>Board of Directors</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>Aspen Group Resources Corporation</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>We have audited the accompanying consolidated balance sheets of Aspen Group Resources Corporation and Subsidiaries as of December 31, 2005 and 2004 and the related consolidated statements of operations and comprehensive loss, changes in stockholders&#146; equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). &nbsp;Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. &nbsp;An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. &nbsp;An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. &nbsp;We believe that our audits provide a reasonable basis for our opinion.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aspen Group Resources Corporation and Subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>As more fully discussed in Note 15, the Company discontinued its oil and gas activities in the United States during 2004. &nbsp;&nbsp;Historically, assets, liabilities and the results of these oil and gas activities in the United States have represented a substantial portion of the Company&#146;s total assets, liabilities and results of operations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; padding-left:36pt; font-size:12pt">Lane Gorman Trubitt, LLP</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>Dallas, Texas</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:11pt" align=justify>March 24, 2006</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=294></TD><TD width=11.7></TD><TD width=72></TD><TD width=12.1></TD><TD width=71.9></TD></TR>
<TR><TD valign=top width=615.6 colspan=5><P style="margin:0pt; padding-right:2.9pt" align=center><B>CONSOLIDATED BALANCE SHEETS</B></P>
<P style="margin:0pt" align=center><B>December 31, 2005</B></P>
</TD></TR>
<TR><TD valign=top width=615.6 colspan=5><P style="margin:0pt; padding-right:2.9pt" align=center><B>(Expressed in US Dollars)</B></P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt" align=center><B>2005</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt"><U>ASSETS</U></P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Current Assets</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Cash</P>
</TD><TD valign=top width=15.6><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,602</B></P>
</TD><TD valign=top width=16.133><P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>4,996,185</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Cash - restricted</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>1,000,000</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Accounts receivable, net of allowances</P>
<P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($105,772 in 2005 and $150,669 in 2004)</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt" align=right><BR></P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Trade</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>1,640,630</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>1,409,092</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Other</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>109,435</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>11,631</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Net assets of discontinued operations</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>1,281,037</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Materials and supplies inventory</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>326,573</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>69,577</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Prepaid expenses</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>32,000</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>111,113</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Assets held for resale</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>600,390</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,712,630</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>7,878,635</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Proved Oil &amp; Gas Properties (full cost method)</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;net of accumulated depletion of $19,404,018 and $16,838,004</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>6,679,977</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>5,085,989</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Property and Equipment</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;net of accumulated depreciation of $2,274,260 and $2,297,532</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>655,337</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>754,279</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Other Assets</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Notes receivable</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>44,584</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>49,285</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Deposits and other assets</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>8,880</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets</P>
</TD><TD valign=top width=15.6><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>11,092,528</B></P>
</TD><TD valign=top width=16.133><P style="margin:0pt" align=center>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>13,777,068</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=407.6 colspan=2><P style="margin:0pt"><U>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</U></P>
</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Current Liabilities</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Accounts payable</P>
</TD><TD valign=top width=15.6><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>2,767,071</B></P>
</TD><TD valign=top width=16.133><P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>2,106,081</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Net liabilities of discontinued operations</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>192,359</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>1,059,073</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Accrued expenses</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>353,400</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>7,485</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Notes payable - banks</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>747,720</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Current maturities of long-term debt</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>31,770</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>119,994</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,344,600</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>4,040,353</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Long-Term Debt, less Current Maturities</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>225,131</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>215,868</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Asset Retirement Obligations</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>866,749</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>563,236</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Deferred Income Taxes</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">Stockholders&#146; Equity</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=407.6 colspan=2><P style="margin:0pt">&nbsp;&nbsp;Preferred stock, no par value, authorized-unlimited, issued &#150; none</P>
</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=407.6 colspan=2><P style="margin:0pt">&nbsp;&nbsp;Common stock, no par value, authorized-unlimited, issued</P>
</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=407.6 colspan=2><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;74,763,037 in 2005 and 71,203,307 &nbsp;in 2004</P>
</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>63,769,721</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>62,656,769</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Less treasury stock &#150; at cost</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>(97,798)</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>(260,198)</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Foreign currency translation adjustment</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>(277,987)</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>(886,459)</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;Accumulated deficit</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>(56,737,888)</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>(52,552,501)</P>
</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity</P>
</TD><TD valign=top width=15.6>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>6,656,048</B></P>
</TD><TD valign=top width=16.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>8,957,611</P>
</TD></TR>
<TR><TD valign=top width=392>&nbsp;</TD><TD valign=top width=15.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16.133>&nbsp;</TD><TD valign=top width=95.867>&nbsp;</TD></TR>
<TR><TD valign=top width=392><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Stockholders&#146; Equity</P>
</TD><TD valign=top width=15.6><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="margin:0pt; padding-right:2.9pt" align=right><B>11,092,528</B></P>
</TD><TD valign=top width=16.133><P style="margin:0pt" align=center>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=95.867><P style="margin:0pt; padding-right:2.9pt" align=right>13,777,068</P>
</TD></TR>
</TABLE>
<P style="line-height:13pt; margin-top:11pt; margin-bottom:-13pt; padding-left:12.25pt; padding-right:-2.15pt; font-size:11pt"><U>&nbsp;&nbsp;</U><I><U>&#147;signed Robert L. Calentine&#148;</U></I></P>
<P style="line-height:13pt; margin:0pt; padding-left:12.25pt; padding-right:-2.15pt; text-indent:237.95pt; font-size:11pt"><I><U>&nbsp;&nbsp;&#147;signed Allan C. Thorne&#148;</U></I></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:12pt; padding-right:-1.8pt">Robert L. Calentine, Director and CEO</P>
<P style="margin:0pt; padding-left:12pt; padding-right:-1.8pt; text-indent:274.2pt">Allan C. Thorne, CFO</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt">The accompanying notes are an integral part of these financial statements.</P>
<P style="margin:0pt" align=center>2</P>
<P style="margin:0pt" align=center><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=238.5></TD><TD width=12></TD><TD width=66></TD><TD width=12></TD><TD width=59.1></TD><TD width=12></TD><TD width=60.9></TD></TR>
<TR><TD valign=top width=614 colspan=7><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>COMPREHENSIVE LOSS</B></P>
</TD></TR>
<TR><TD valign=top width=614 colspan=7><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>Years ended December 31, 2005 and 2004</B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt" align=center><B>2005</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">REVENUE</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Oil and gas sales</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,048,515</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>2,647,488</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Product and service revenues</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>896,789</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>1,029,713</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total revenues</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,945,304</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>3,677,201</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">EXPENSES</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Oil and gas production</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>1,442,180</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>1,171,681</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Operating expenses</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>734,922</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>852,168</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;General and administrative</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,114,341</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>3,860,082</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Depreciation and depletion and accretion expense</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>2,698,173</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>1,815,715</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total expenses</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>7,989,616</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>7,699,646</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">LOSS FROM CONTINUING OPERATIONS</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt" align=right><B>(4,044,312)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(4,022,445)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">OTHER INCOME (EXPENSE)</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Interest and financing expense</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(39,066)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(64,897)</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Gain /loss on sale of assets</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>(83,637)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>52,217</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Income tax recovery (expense) Canada</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(7,272)</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Other income /expense</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>(12,495)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>129,203</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;Foreign currency loss</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:2.9pt" align=right><B>(30,867)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Total other</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(141,075)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt; padding-right:3.6pt" align=right>109,251</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">NET LOSS FROM CONTINUING OPERATIONS</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(4,185,387)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(3,913,194)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">DISCONTINED OPERATIONS</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;Revenues from US Oil and Gas Production Activities</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt; padding-right:3.6pt" align=right>2,293,495</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;Expenses from US Oil and Gas Production Activities</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(1,675,674)</P>
</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;Loss from disposal of US Oil and Gas Production </P>
<P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Activities</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-right:3.6pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right>(15,776,240)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81.2><P style="margin:0pt" align=right>(15,158,419)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">NET LOSS</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(4,185,387)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(19,071,613)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">Other comprehensive loss:</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment, net of tax</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>608,472</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(283,692)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt; padding-left:72pt">COMPREHENSIVE LOSS</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(3,576,915)</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(19,355,305)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:2pt double #000000" valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-top:2pt double #000000" valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">BASIC AND DILUTED NET LOSS FROM </P>
<P style="margin:0pt">&nbsp;&nbsp;&nbsp;CONTINUING OPERATIONS &nbsp;PER SHARE</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=78.8><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-right:3.6pt" align=right><B>(.06)</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=81.2><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right>(.06)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">BASIC AND DILUTED NET LOSS PER SHARE</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD valign=top width=78.8><P style="margin:0pt; padding-right:3.6pt" align=right><B>(.05)</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=center>$</P>
</TD><TD valign=top width=81.2><P style="margin:0pt" align=right>(.30)</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
<TR><TD valign=top width=318><P style="margin:0pt">BASIC AND DILUTED WEIGHTED AVERAGE </P>
<P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;SHARES</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16><P style="margin:0pt" align=center><BR></P>
</TD><TD valign=top width=78.8><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-right:2.9pt" align=right><B>74,179,636</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=center><BR></P>
</TD><TD valign=top width=81.2><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-right:2.9pt" align=right>64,522,558</P>
</TD></TR>
<TR><TD valign=top width=318>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=78.8>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81.2>&nbsp;</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<P style="margin:0pt">The accompanying notes are an integral part of these financial statements.</P>
<P style="margin:0pt" align=center>3</P>
<P style="margin:0pt" align=center><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=149.4></TD><TD width=60></TD><TD width=12></TD><TD width=52.45></TD><TD width=73.55></TD><TD width=12></TD><TD width=72></TD><TD width=11.8></TD><TD width=49.5></TD><TD width=76.7></TD><TD width=72></TD><TD width=11.8></TD><TD width=60.2></TD></TR>
<TR><TD valign=top width=951.2 colspan=13><P style="margin:0pt; padding-right:-17.1pt" align=center><B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY</B></P>
<P style="margin:0pt; padding-right:-17.1pt" align=center><B>Years ended December 31, 2005 and 2004</B></P>
<P style="margin:0pt; padding-right:-17.1pt" align=center><B>(Expressed in US Dollars)</B></P>
</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=81.733 colspan=2>&nbsp;</TD><TD valign=top width=198.267 colspan=2>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=81.733 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center>WARRANTS</P>
</TD><TD valign=top width=198.267 colspan=2>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=81.733 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center>AND</P>
</TD><TD valign=top width=198.267 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOREIGN</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center>COMMON</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=81.733 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center>BENEFICIAL</P>
</TD><TD valign=top width=198.267 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CURRENCY</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=165.933 colspan=3><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center>COMMON STOCK</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center>STOCK</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center>TREASURY</P>
</TD><TD valign=top width=81.733 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center>CONVERSION</P>
</TD><TD valign=top width=198.267 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center>TRANSLATION &nbsp;&nbsp;&nbsp;&nbsp;ACCUMULATED</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><U>SHARES</U></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><U>AMOUNT</U></P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center><U>SUBSCRIBED</U></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center><U>STOCK</U></P>
</TD><TD valign=top width=81.733 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt" align=center><U>FEATURE</U></P>
</TD><TD valign=top width=198.267 colspan=2><P style="line-height:11pt; margin:0pt; padding-left:-14.4pt; padding-right:-14.4pt; font-size:9pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADJUSTMENT</U> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;DEFICIT</U></P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin:0pt; padding-right:-17.1pt; font-size:9pt" align=center><U>TOTAL</U></P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">BALANCES, December 31, 2003</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>51,378,037</P>
</TD><TD valign=top width=16><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>58,895,708</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(214,436)</P>
</TD><TD valign=top width=16><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>(113,849)</P>
</TD><TD valign=top width=15.733><P style="line-height:11pt; margin:0pt; padding-right:-17.1pt; font-size:9pt">$</P>
</TD><TD valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>823,695</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(602,767)</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>$ &nbsp;&nbsp;&nbsp;(33,480,888)</P>
</TD><TD valign=top width=15.733><P style="line-height:11pt; margin:0pt; padding-right:-17.1pt; font-size:9pt">$</P>
</TD><TD valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>25,307,463</P>
</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66>&nbsp;</TD><TD valign=top width=102.267>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; padding-left:10.2pt; font-size:9pt">Issuance of shares in private offering which closed in April 2004</P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>12,000,000</P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
</TD><TD valign=top width=69.933><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>2,283,105</P>
</TD><TD valign=top width=98.067><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="margin:0pt"><BR></P>
<P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=80.267><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>2,283,105</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-left:10.2pt; font-size:9pt">Exercise of options</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>1,200,000</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>127,478</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>127,478</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-left:10.2pt; font-size:9pt">Exercise of stock warrants</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>6,625,000</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>741,219</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>741,219</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-left:10.2pt; font-size:9pt">Cancellation / expiration of subscriptions and warrants</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>609,259</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;214,436</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(823,695)</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-left:10.2pt; font-size:9pt">Acquisition of treasury stock</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(146,349)</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(146,349)</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Translation adjustment</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(283,692)</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(283,692)</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-left:10.2pt; font-size:9pt">Net loss</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=69.933><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=98.067><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=66><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=102.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(19,071,613)</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80.267><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:0pt; font-size:9pt" align=right>(19,071,613)</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">BALANCES, December 31, 2004</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>71,203,037</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>62,656,769</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>(260,198)</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(886,459)</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>(52,552,501)</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>8,957,611</P>
</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66>&nbsp;</TD><TD valign=top width=102.267>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">Exercise of purchase warrants</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>3,560,000</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>963,072</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>963,072</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">Shares issued for compensation from treasury</P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>149,880</P>
</TD><TD valign=top width=98.067><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>162,400</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="margin:0pt"><BR></P>
<P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>312,280</P>
</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933>&nbsp;</TD><TD valign=top width=98.067>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66>&nbsp;</TD><TD valign=top width=102.267>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267>&nbsp;</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">Translation adjustment</P>
</TD><TD valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;608,472</P>
</TD><TD valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>608,472</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt">Net loss</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>(4,185,387)</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right>(4,185,387)</P>
</TD></TR>
<TR><TD valign=top width=199.2><P style="line-height:11pt; margin:0pt; font-size:9pt"><B>BALANCES, December 31, 2005</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=80><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>74,763,037</B></P>
</TD><TD valign=top width=16><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=69.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>63,769,721</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=98.067><P style="line-height:11pt; margin:0pt; font-size:9pt"><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</B></P>
</TD><TD valign=top width=16><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>(97,798)</B></P>
</TD><TD valign=top width=15.733><P style="line-height:11pt; margin:0pt; padding-right:-17.1pt; font-size:9pt"><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=66><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=102.267><P style="line-height:11pt; margin:0pt; padding-right:-15.05pt; font-size:9pt"><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(277,987)</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>$ &nbsp;&nbsp;&nbsp;(56,737,888)</B></P>
</TD><TD valign=top width=15.733><P style="line-height:11pt; margin:0pt; padding-right:-17.1pt; font-size:9pt"><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=80.267><P style="line-height:11pt; margin:0pt; font-size:9pt" align=right><B>6,656,048</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=center><BR>
<BR></P>
<P style="margin:0pt">The accompanying notes are an integral part of these financial statements.</P>
<P style="margin:0pt" align=center>4</P>
<P style="margin:0pt" align=center><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=265.5></TD><TD width=12></TD><TD width=72></TD><TD width=12></TD><TD width=66></TD><TD width=12></TD><TD width=60></TD></TR>
<TR><TD width=666 colspan=7><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>
</TD></TR>
<TR><TD width=666 colspan=7><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>Years ended December 31, 2005 and 2004</B></P>
</TD></TR>
<TR><TD width=666 colspan=7><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=center><B>2005</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=center>2004</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>CASH FLOWS FROM OPERATING ACTIVITIES</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Net loss</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(4,185,387)</B></P>
</TD><TD width=16><P style="margin:0pt" align=center>$</P>
</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(19,071,613)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Adjustments to reconcile net loss to net cash </P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided (used) by operating activities:</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Gain/loss on sale of fixed assets</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>83,637</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(52,217)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and depletion</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>2,669,462</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>1,841,806</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>312,280</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Loss on sale of discontinued operations</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>15,776,240</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Cash flows from operations</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(1,120,008)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(1,505,784)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;Change in assets and liabilities, net</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>1,049,501</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>1,143,683</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and deposits</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(9,811)</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>8,348</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>140,090</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(2,295,564)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(256,996)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>246,449</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) operating activities</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(197,224)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(2,402,868)</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>CASH FLOWS FROM INVESTING ACTIVITIES</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Purchase certificate of deposit</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(1,000,000)</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Principle payments received on notes receivable</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>4,701</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Proceeds from the sale of other assets</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>16,600</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Proceeds from sale of oil and gas properties</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>18,586,814</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Exploration and development costs capitalized</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(3,819,955)</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(2,268,871)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Acquisition of property and equipment</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(133,096)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(84,279)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by investing activities</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(4,931,750)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>16,233,664</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>CASH FLOWS FROM FINANCING ACTIVITIES</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Bank overdraft</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>9,598</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Sale of common stock</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>963,072</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>3,151,802</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Acquisition of treasury stock</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(146,349)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Repayment of notes payable and long-term debt</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(826,681)</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(12,476,953)</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>136,391</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>(9,461,902)</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>NET (DECREASE) INCREASE IN CASH</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>(4,992,583)</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>4,368,894</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>CASH - Beginning of period</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>4,996,185</B></P>
</TD><TD width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>627,291</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>CASH &#150; End of period</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=center><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>3,602</B></P>
</TD><TD width=16><P style="margin:0pt" align=center>$</P>
</TD><TD style="border-bottom:2pt double #000000" width=80><P style="margin:0pt; padding-right:2.9pt" align=right>4,996,185</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="line-height:11.5pt; margin:0pt; font-size:9.5pt"><B>SUPPLEMENTAL CASH FLOW INFORMATION</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Cash paid for interest</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=right><B>$</B></P>
</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>39,066</B></P>
</TD><TD width=16><P style="margin:0pt" align=right>$</P>
</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>402,777</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Income taxes paid</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=right><B>$</B></P>
</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>-</B></P>
</TD><TD width=16><P style="margin:0pt" align=right>$</P>
</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>7,272</P>
</TD></TR>
<TR><TD width=354>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt"><B>NON CASH INVESTING AND FINANCING ACTIVITIES</B></P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=88>&nbsp;</TD><TD width=16>&nbsp;</TD><TD width=80>&nbsp;</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Financed equipment purchase</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=right><B>$</B></P>
</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>19,500</B></P>
</TD><TD width=16><P style="margin:0pt" align=right>$</P>
</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
<TR><TD width=354><P style="margin:0pt">&nbsp;&nbsp;Notes payable refinancing</P>
</TD><TD width=16>&nbsp;</TD><TD width=96>&nbsp;</TD><TD width=16><P style="margin:0pt" align=right><B>$</B></P>
</TD><TD width=88><P style="margin:0pt; padding-right:2.9pt" align=right><B>268,631</B></P>
</TD><TD width=16><P style="margin:0pt" align=right>$</P>
</TD><TD width=80><P style="margin:0pt; padding-right:2.9pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR>
<BR>
<BR></P>
<P style="margin:0pt">The accompanying notes are an integral part of these financial statements.</P>
<P style="margin:0pt" align=center>5</P>
<P style="margin:0pt" align=center><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">1.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">NATURE OF BUSINESS</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The primary business focus of Aspen Group Resources Corporation (the &#147;Company&#148; or &#147;Aspen&#148;) is to build value through the development of its existing producing oil and gas properties by conducting an active exploitation program on these properties and pursuing the acquisition, development, and exploitation of oil and gas properties in both the United States and Canada that offer the potential for increased production while continuing to control costs.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Nature of Operations</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company, based in Calgary, Alberta, is engaged in the exploration, development and production of oil and gas properties located primarily in Alberta and Manitoba.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Substantially all of the Company&#146;s oil and gas production is sold under short-term contracts which are market-sensitive. &nbsp;Accordingly, the Company&#146;s financial condition, results of operations and capital resources are highly dependent upon prevailing market prices of, and demand for, oil and natural gas. &nbsp;These commodity prices area subject to wide fluctuations and market uncertainties due &nbsp;to a variety of factors that are beyond the control of the Company. &nbsp;&nbsp;These factors include the level of global demand for petroleum products, foreign supply of oil and gas, the establishment of and compliance with production quotas by oil-exporting countries, weather conditions, the price and availability of alternative fuels, and overall economic conditions, both foreign and domestic.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>In 2005, the Company incurred a net loss of $4,185,387, and its unrestricted cash decreased by approximately $5 million. &nbsp;At December 31, 2005 current liabilities exceeded current assets (excluding cash of $1.0 million which is restricted in connection with a pending lawsuit against the Company) by approximately $1.4 million. &nbsp;In addition, the Company is involved in certain ongoing litigation which requires significant legal representation costs. &nbsp;Management expects resolution of certain litigation during 2006 which could result in a release on the restrictions of a portion of the $1.0 million cash to the Company and a reduction in ongoing legal costs. &nbsp;However, there can be no assurance that the present and longer term cash requirements of the Company will be satisfied either from revenues from operations or from future financings. &nbsp;If the Company is unable to attain profitable operations and successfully secure adequate or satisfactory financing as required, there is the possibility that the Company may be unable to continue to realize its assets and to discharge it liabilities in the normal course of business.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>&nbsp;</P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Management believes that, despite the financial hurdles and funding uncertainties going forward, it has under development, a business plan that if successfully funded and executed as part of the financial restructuring, can significantly improve operating results. &nbsp;With the bank loan renewal and monetizing unutilized assets and existing cash flow the Company should be able to meet its future obligations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">2.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Basis of Presentation</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States. &nbsp;The Company&#146;s functional currency is the U.S. dollar; accordingly, the accompanying financial statements are presented in U.S. dollars. &nbsp;The effects of exchange rate changes on transactions denominated in Canadian dollars or other currencies are charged to foreign currency translation adjustment.</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:14pt; margin:0pt; text-indent:238.55pt; font-size:12pt">6</P>
<P style="margin:0pt"><BR></P>
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<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Principles of Consolidation</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. &nbsp;All material intercompany accounts and transactions of consolidated subsidiaries have been eliminated in consolidation.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Joint Operations</U></I></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Certain of the petroleum and natural gas activities are conducted jointly with others. &nbsp;These consolidated financial statements reflect only the Company's proportionate interest in such activities.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Financial Instruments</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company has estimated the fair value of its financial instruments which include cash and cash equivalents, accounts receivable, advances to operators, due to and from related companies, contracts receivable and payable, investments, accounts payable, accrued liabilities, notes payable and long-term debt. &nbsp;The Company used valuation methodologies and market information available and unless otherwise noted, it is management&#146;s opinion that the Company is not exposed to significant interest, currency or credit risks arising from their financial instruments. &nbsp;It has been determined that the carrying amounts of such financial instruments approximate fair value in all cases, unless otherwise noted.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Cash and Cash Equivalents</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company maintains its cash balances in institutions located in the United States and Canada. &nbsp;The United States balances are insured by the Federal Deposit Insurance Corporation up to $100,000 per institution. &nbsp;The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Restricted Cash</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>During the year, the Company was required to place a $1.0 million dollar bond along with a court of appeal application to appeal a lawsuit decision. &nbsp;The bond issuer required $1.0 million dollars cash as collateral.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Trade Receivables</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Trade accounts receivable are recorded in accordance with terms and amounts as specified in the related contracts on an ongoing basis. &nbsp;The Company evaluates the collectibility of accounts receivable on a specific account basis using a combination of factors, including the age of the outstanding balances, evaluation of the customer&#146;s financial condition, and discussions with relevant Company personnel and with the customers directly. &nbsp;An allowance for doubtful accounts or direct write-off is recorded when it is determined that the receivable may not be collected, depending on the facts known and the probability of collection of the outstanding amount.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Inventories</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Inventories, which consist primarily of acidizing and cementing products, supplies and equipment held for resale, are stated at the lower of cost or market using the first-in, first-out (FIFO) method.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">7</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-size:11pt">2.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Oil and Gas Properties</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company follows the full-cost method of accounting for oil and gas properties. &nbsp;Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized into a &#147;full-cost pool&#148;. &nbsp;A separate full cost pool is established for U.S. and non-U.S. properties. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. &nbsp;Costs directly associated with the acquisition and evaluation of unproved properties are excluded from the amortization base until the related properties are evaluated. &nbsp;Such unproved properties are assessed periodically and a provision for impairment is made to the full-cost amortization base when appropriate. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Sales of oil and gas properties are credited to the full-cost pool unless the sale would have a significant effect on the amortization rate. &nbsp;Abandonments of properties are accounted for as adjustments to capitalized costs with no loss recognized. &nbsp;Oil and gas drilling and workover equipment used primarily on the Company&#146;s properties are included in the full cost pool.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The net capitalized costs are subject to an &#147;asset impairment test&#148; which limits such costs to the aggregate of the estimated present value of future net revenues from proved reserves discounted at ten percent based on current economic and operating conditions. &nbsp;Any excess carrying cash are charged to impairment expense.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The recoverability of amounts capitalized for oil and gas properties is dependent upon the identification of economically recoverable reserves, together with obtaining the necessary financing to exploit such reserves and the achievement of profitable operations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Property and Equipment</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Property and equipment is recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. &nbsp;Major repairs or replacements are capitalized. &nbsp;Maintenance, repairs and minor replacements are charged to operations as incurred. &nbsp;When units of property are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Long-lived assets, other than oil and gas properties, are periodically reviewed for impairment based on an assessment of future operations. &nbsp;The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets&#146; carrying amount. &nbsp;Measurement of an impairment loss is based on the fair market value of the asset. &nbsp;Impairment for oil and gas properties is computed in the manner described above under &#147;Oil and Gas Properties.&#148; </P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">8</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">2.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Asset Retirement Obligations</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The company recognizes the fair value of estimated asset retirement obligations on the consolidated balance sheet when a reasonable estimate of fair value can be made. &nbsp;Asset retirement obligations include those for which a company faces a legal obligation to retire tangible long-lived assets such as well sites, pipelines and facilities. &nbsp;Increases in the asset retirement obligations resulting from the passage of time are recorded as accretion to the asset retirement obligations in the consolidated statement of earnings. &nbsp;Actual expenditures incurred are charged against the accumulated obligations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The asset retirement cost, equal to the estimated fair value of the retirement obligations, is capitalized as part of the cost of the related long-lived asset. &nbsp;Asset retirement costs are amortized using the unit-of-production method and are included in depletion and depreciation in the consolidated statement of operations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Income Taxes</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due, if any, plus net deferred taxes related primarily to differences between the bases of assets and liabilities for financial and income tax reporting. &nbsp;Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. &nbsp;Deferred tax assets include recognition of operating losses that are available to offset future taxable income and tax credits that are available to offset future income taxes. &nbsp;Valuation allowances are recognized to limit recognition of deferred tax assets where appropriate. &nbsp;Such allowances may be reversed when circumstances provide evidence that the deferred tax assets will more likely than not be realized.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Net Earnings(Loss) Per Share</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Per share information is based on the weighted average number of common stock and common stock equivalent shares outstanding. As required by the Securities and Exchange Commission rules, all warrants, options, and shares issued within a year prior to the initial filing of a registration statement are assumed to be outstanding for each year presented for purposes of the earnings per share calculation.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Stock-Based Compensation</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Statement of Financial Accounting Standards No. 123R -<I> Accounting for Stock-Based Compensation</I> (SFAS 123R), requires recognition of compensation expense for grants of stock, stock options, and other equity instruments based on fair value. &nbsp;If the grants are to employees, companies may elect to disclose only the pro forma effect of such grants on net income and earnings per share in the notes to financial statements and continue to account for the grants pursuant to APB Opinion No. 25, <I>Accounting for Stock Issued to Employees</I>. &nbsp;The Company has elected the pro forma disclosure alternative for employee grants.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Revenue Recognition</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Revenue is accrued and recognized in the month the oil and gas is produced and sold. &nbsp;Reimbursement of costs from well operations is netted against the related oil and gas production expenses. </P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">9</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">2.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Use of Estimates</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The preparation of the Company&#146;s consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. &nbsp;Actual results could differ from those estimates. &nbsp;Significant assumptions are required in the valuation of proved oil and gas reserves, which as described above may affect the amount at which oil and gas properties are recorded. &nbsp;The Company is also involved in several litigation situations and the outcome of these claims is estimated based upon the probability of expected loss contingencies. &nbsp;It is at least reasonably possible those estimates could be revised in the near term and those revisions could be material.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Comprehensive Income</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>SFAS No. 130, <I>Reporting Comprehensive Income,</I> established standards for reporting and displaying of comprehensive income and its components (revenue, expenses, gains and losses) in a full set of general-purpose financial statements.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Reclassifications &#150; Prior Year</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Certain financial statement balances have been reclassified to conform to current year presentation.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Recently Promulgated Accounting Policies</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Previously, in December 2002, the FASB issued SFAS No. 148, &#147;Accounting for Stock-Based Compensations &#150; Transition an Disclosure, an amendment of FAS Statement 123,&#148; (&#147;SFAS 148&#148;) which provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. &nbsp;SFAS 148 also amends certain disclosures under SFAS 123 and APB Opinion No. 28, &#147;Interim Financial Reporting&#148; to require prominent disclosure about the effects on reported net income of an entity&#146;s accounting policy decisions with respect to stock-based employee compensation. &nbsp;SFAS 148 was effective for fiscal years ending after December 15, 2002. &nbsp;During the years ended 2004 and 2003, the Company did not issue any stock-based compensation. &nbsp;During December 31, 2005, the Company issued 1,000,000 shares for stock compensation.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>In December 2004, the FASB issued SFAS 153, &#148;Exchanges of Nonmonetary Assets.&#148; &nbsp;This Statement amends APB No. Opinion 29 to eliminate the exception for nonmonetary exchange of similar productive asses and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. &nbsp;A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. &nbsp;The provisions of SFAS 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. &nbsp;Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after December 16, 2004. &nbsp;The provisions of SFAS 153 should be applied prospectively. &nbsp;Management does not expect the adoption of this pronouncement to have a material effect on the Company&#146;s consolidated financial statements.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">10</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">2.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>In June 2005, FASB issued SFAS 154, &#147;Accounting Changes and Errors Corrections,&#148; a replacement of APB Opinion No. 20 and SFAS 3. &nbsp;SFAS 154 applied to all voluntary changes in accounting principles, and changes the requirements for accounting for and reporting of a change in accounting principle. &nbsp;SFAS 154 requires retrospective application to prior periods&#148; financial statements of a voluntary change in accounting principle unless it is impractical. &nbsp;APB Opinion No. 20 previously required that most voluntary changes in accounting principle to be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. &nbsp;SFAS 154 improves the financial reporting because its requirements enhance the consistency of the financial reporting between periods. &nbsp;During the audit period, the Company did not have any accounting changes or error corrections.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>In June 2005, the Emerging Issues Task Force (&#147;EITF&#148;) reached consensus on Issue No. 05-6, &#147;Determining the Amortization Period for Leasehold Improvements&#148; (&#147;EITF 05-6&#148;). &nbsp;EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. &nbsp;The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. &nbsp;EIFT 05-6 is not expected to have a material impact on the Company&#146;s consolidated financial statements.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>In April 2005 the FASB issued FASB Interpretation (&#147;FIN&#148;) No. 47, &#147;Accounting for Conditional Asset Retirement Obligations.&#148; &nbsp;FIN No. 47 provides clarification of certain sections of FASB Statement No. 143, &#147;Accounting for Asset Retirement Obligations.&#148; &nbsp;Specifically, SFAS 47 clarifies the term conditional asset retirement obligation used in SFAS 143 and also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. &nbsp;FIN No. 47 is effective no later than the end of fiscal years ending after December 31, 2005. &nbsp;Management is currently evaluating the provisions of FIN No. 47 and does not expect the adoption will have a material impact on the Company&#146;s consolidated financial position, results of operations or cash flows.</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">11</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-size:11pt">3.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">PROPERTY AND EQUIPMENT</P>
<P style="line-height:13pt; margin-top:11pt; margin-bottom:-10pt; padding-left:21pt; padding-top:3pt; padding-right:3pt; font-size:11pt; border:0.75pt solid #FFFFFF" align=justify>a)</P>
<P style="line-height:13pt; margin:0pt; padding-left:21pt; padding-top:3pt; padding-right:3pt; padding-bottom:3pt; text-indent:18pt; font-size:11pt; border:0.75pt solid #FFFFFF" align=justify>Property and equipment consist of the following at December 31,</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=240></TD><TD width=12></TD><TD width=60></TD><TD width=18></TD><TD width=72></TD><TD width=12></TD><TD width=60.75></TD></TR>
<TR><TD valign=top width=320>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>2005</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>2004</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=81><P style="line-height:13pt; margin:0pt; padding:3pt; font-size:11pt; border:0.75pt solid #FFFFFF" align=right>Estimated</P>
<P style="line-height:13pt; margin:0pt; padding:3pt; font-size:11pt; border:0.75pt solid #FFFFFF" align=right>Useful Lives</P>
</TD></TR>
<TR><TD valign=top width=320><P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36.6pt; font-size:11pt" align=justify>Office furniture and equipment</P>
</TD><TD valign=top width=16><P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B>$</B></P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>464,598</B></P>
</TD><TD valign=top width=24><P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>539,688</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>4 &#150; 10</P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>&nbsp;years</P>
</TD></TR>
<TR><TD valign=top width=320><P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36.6pt; font-size:11pt" align=justify>Equipment</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>310,498</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>310,498</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>5 &#150; 10</P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>&nbsp;years</P>
</TD></TR>
<TR><TD valign=top width=320><P style="line-height:13pt; margin:0pt; padding-left:36.6pt; font-size:11pt" align=justify>Vehicles</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>1,353,411</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>1,400,535</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>5 years</P>
</TD></TR>
<TR><TD valign=top width=320><P style="line-height:13pt; margin:0pt; padding-left:36.6pt; font-size:11pt" align=justify>Buildings and improvements</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>561,542</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>561,542</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>25 years</P>
</TD></TR>
<TR><TD valign=top width=320><P style="line-height:13pt; margin:0pt; padding-left:36.6pt; font-size:11pt" align=justify>Land</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>239,548</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>239,548</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81>&nbsp;</TD></TR>
<TR><TD valign=top width=320>&nbsp;</TD><TD valign=top width=16><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B>$</B></P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>2,929,597</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>3,051,811</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81>&nbsp;</TD></TR>
<TR><TD valign=top width=320><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Less accumulated depreciation</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>2,274,260</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>2,297,532</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81>&nbsp;</TD></TR>
<TR><TD valign=top width=320>&nbsp;</TD><TD valign=top width=16><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=80><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>655,337</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>754,279</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=81>&nbsp;</TD></TR>
</TABLE>
<P style="margin:0pt; padding:3pt; border:0.75pt solid #FFFFFF" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:21pt; padding-top:3pt; padding-right:3pt; padding-bottom:3pt; font-size:11pt; border:0.75pt solid #FFFFFF" align=justify>Depreciation charged to expense amounted to $115,747 and $120,803 for 2005 and 2004, respectively.</P>
<P style="margin:0pt; padding:3pt; border:0.75pt solid #FFFFFF" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; font-size:11pt" align=justify>b)</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Oil and Gas Properties</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=239.4></TD><TD width=13.5></TD><TD width=58.5></TD><TD width=18></TD><TD width=72></TD><TD width=12></TD><TD width=66></TD></TR>
<TR><TD valign=top width=319.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=78><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>Cost</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center>Accumulated</P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center>Depletion</P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center>&nbsp;and</P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center>Depreciation</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>2004</P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>Net Book</P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>Value</P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; text-indent:18pt; font-size:11pt" align=justify><B><I>United States</I></B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;equipment &nbsp;- Canadian subsidiary</P>
</TD><TD valign=top width=18><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>1,255,832</P>
</TD><TD valign=top width=24><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>(1,095,834)</P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>159,998</P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;equipment &#150; US operations</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>157,182</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>-</P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>157,182</P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; text-indent:18pt; font-size:11pt" align=justify><B><I>Canada</I></B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;equipment</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>20,510,979</P>
</TD><TD valign=top width=24><P style="margin:0pt" align=right><BR></P>
</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>(15,742,170)</P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>4,768,809</P>
</TD></TR>
<TR><TD valign=top width=319.2>&nbsp;</TD><TD valign=top width=18><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=78><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>21,923,993</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>(16,838,004)</P>
</TD><TD valign=top width=16><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right>5,085,989</P>
</TD></TR>
<TR><TD valign=top width=319.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD></TR>
<TR><TD valign=top width=319.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=78><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Cost</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Accumulated</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Depletion and</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Depreciation</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>2005</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Net Book</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=center><B>Value</B></P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; text-indent:18pt; font-size:11pt" align=justify><B><I>United States</I></B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;equipment &#150; Canadian subsidiary</P>
</TD><TD valign=top width=18><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>1,283,897</B></P>
</TD><TD valign=top width=24><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>(1,146,809)</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>137,088</B></P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;equipment &#150; US operations</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>1,184,168</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>(1,031,727)</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>152,441</B></P>
</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; text-indent:18pt; font-size:11pt" align=justify><B><I>Canada</I></B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=78>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>Petroleum and natural gas properties and</P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; text-indent:9pt; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Equipment</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=78><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>23,615,930</B></P>
</TD><TD valign=top width=24><P style="margin:0pt" align=right><BR></P>
</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>(17,225,482)</B></P>
</TD><TD valign=top width=16><P style="margin:0pt" align=right><BR></P>
</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>6,390,448</B></P>
</TD></TR>
<TR><TD valign=top width=319.2>&nbsp;</TD><TD valign=top width=18><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=78><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>26,083,995</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>(19,404,018)</B></P>
</TD><TD valign=top width=16><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:11pt" align=right><B>6,679,977</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">12</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">3.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">PROPERTY AND EQUIPMENT, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; font-size:11pt" align=justify>c)</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:18pt; font-size:11pt" align=justify>Depletion </P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>At December 31, 2005 there were $986,728 (2004 $1,117,333) for unproven properties which have been excluded from the depletion calculation. &nbsp;The Company converted its gas to bbls (barrels) using 6:1 conversion rate.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; font-size:11pt" align=justify>d)</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Capitalized overhead</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>During the years ended December 31, 2005 and 2004, the Company capitalized overhead expenditures directly related to exploration and development activities of approximately $51,156 and $85,000, respectively.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; font-size:11pt" align=justify>e)</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Impairment test</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>At December 31, 2005, the Company recorded a write-down of $110,000 in relation to its US oil and gas properties on a cost center impairment test. &nbsp;These write-downs have been included in depletion and depreciation within the consolidated statement of operations and comprehensive loss. &nbsp;In addition, the Company recorded a charge of $1,031,727 in association with a dry hole in North Dakota.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; font-size:11pt" align=justify>f)</P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Assets held for resale</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>The Company has decided to monetize a gas plant facility which is currently not in use.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">4.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">NOTES RECEIVABLE</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Notes receivable consist of the following at December 31,</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=311.4></TD><TD width=16.3></TD><TD width=61.7></TD><TD width=16.3></TD><TD width=64.9></TD></TR>
<TR><TD valign=top width=415.2>&nbsp;</TD><TD valign=top width=21.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=82.267><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>2005</P>
</TD><TD valign=top width=21.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.533><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>2004</P>
</TD></TR>
<TR><TD valign=top width=415.2>&nbsp;</TD><TD valign=top width=21.733>&nbsp;</TD><TD valign=top width=82.267>&nbsp;</TD><TD valign=top width=21.733>&nbsp;</TD><TD valign=top width=86.533>&nbsp;</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Note receivable</P>
</TD><TD valign=top width=21.733><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD valign=top width=82.267><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>54,019</P>
</TD><TD valign=top width=21.733><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD valign=top width=86.533><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>60,916</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Less current maturities</P>
</TD><TD valign=top width=21.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=82.267><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>(9,435)</P>
</TD><TD valign=top width=21.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.533><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>(11,631)</P>
</TD></TR>
<TR><TD valign=top width=415.2>&nbsp;</TD><TD valign=top width=21.733><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=82.267><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>44,584</P>
</TD><TD valign=top width=21.733><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=86.533><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>49,285</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>On October 1, 1995 a subsidiary company entered into a gas purchase contract to purchase up to 850,287 mcf of natural gas from a third party at a price of $0.322 mcf. &nbsp;The Company prepaid two thirds of the contract at that time. &nbsp;Leaving a remaining one third to be paid as the volumes are delivered to the Company. &nbsp;The volumes are delivered to the Company based on gas production from a certain common gas field.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The contract receivable amount represents future prepaid gas receipts. &nbsp;The contract payable represents a future liability owed to the seller upon future gas deliveries.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The remaining amount still obligated to purchase as at December 31, 2005 is 166,515 mcf (2004 &#150; 194,091 mcf).</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The term of this contact expires upon delivery of all gas or the natural gas leases expire or June 1, 2020.</P>
<P style="margin:0pt" align=justify><BR>
<BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">13</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">5.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">NOTES PAYABLE &#150; BANKS</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The following is a summary of notes payable &#150; banks at December 31:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=323.4></TD><TD width=18></TD><TD width=84></TD><TD width=12></TD><TD width=60></TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=112><P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=center><B>2005</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=112>&nbsp;</TD><TD valign=top width=16>&nbsp;</TD><TD valign=top width=80>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Revolving $1,246,000 production loan, repayable in equal monthly installments of $62,310 commencing September 1, 2004 bearing interest at bank prime plus 0.75% which is secured by petroleum and natural gas properties</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=112><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=16>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=right>747,720</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=112><P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=16><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=80><P style="line-height:13pt; margin:0pt; padding-right:1.45pt; font-size:11pt" align=right>747,720</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt"><B><I>Line of credit</I></B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt">A subsidiary obtained a line of credit from a bank with a $50,000 credit limit. &nbsp;The interest rate is at the bank&#146;s prime rate plus 1%.</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt">Subsequent to the balance sheet date the Company has renewed their credit facility at their bank. &nbsp;The term is a $857,700 revolving line of credit at 1.5% interest above prime. &nbsp;The loan shall be permanently reduced in 13 equal monthly amounts of $64,327 commencing on April 1, 2006. &nbsp;As of the date of this report no amounts have been drawn against the loan.</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">6.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">LONG TERM DEBT</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The following is a summary of long-term debt at December 31:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=323.4></TD><TD width=18></TD><TD width=81></TD><TD width=13.5></TD><TD width=64.5></TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="line-height:14pt; margin:0pt; font-size:12pt" align=right><B>2005</B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86><P style="line-height:14pt; margin:0pt; font-size:12pt" align=right>2004</P>
</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">$241,263 property loan, payable in monthly installments of $3,713 which includes interest at 7.5% through November 2008 thereafter, Wall Street money rate plus .5% to November 2012, secured by real estate</P>
</TD><TD valign=top width=24><P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt"><B>$</B></P>
</TD><TD valign=top width=108><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>239,723</B></P>
</TD><TD valign=top width=18><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=86><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>222,604</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">$272,419 equipment loan, payable in monthly installments of $6,654 which includes interest at the base prime plus &#189; % through June 2005 secured by substantially all of the Company&#146;s assets</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>84,287</P>
</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">In November 2005 the Company combined the balance of this loan $42,092 with the property loan</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Other</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>17,178</B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>28,971</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=108><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>256,901</B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>335,862</P>
</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:27pt; font-size:11pt">Less &#150; current portion</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>(31,770)</B></P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>119,994</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=108><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>225,131</B></P>
</TD><TD valign=top width=18><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>215,868</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B><I>Five-year maturity schedule:</I></B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Long-term debt is due as follows: 2006 - $31,770; 2007- $29,691; 2008 - $31,996; 2009 &#150; $34,480; 2010 - $37,156; thereafter - $91,808.</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">14</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">7.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">ASSET RETIREMENT OBLIGATIONS</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt">The following table presents the reconciliation of the beginning and the ending aggregated carrying amount of the obligations associated with the retirement of oil and natural gas assets:</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=323.4></TD><TD width=18></TD><TD width=66></TD><TD width=18></TD><TD width=53.4></TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B><U>2005</U></B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><U>2004</U></P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Asset retirement obligations, beginning of year</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt"><B>$</B></P>
</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>563,236</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt">$</P>
</TD><TD valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>589,924</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Liabilities incurred</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>280,948</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>9,838</P>
</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Liabilities settled and disposed</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>(6,147)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>(62,617)</P>
</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Accretion expense</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>28,712</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>26,091</P>
</TD></TR>
<TR><TD valign=top width=431.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=71.2>&nbsp;</TD></TR>
<TR><TD valign=top width=431.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Asset retirement obligations, end of year</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt"><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>866,749</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt">$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=71.2><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>563,236</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">8.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">INCOME TAXES</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Canadian Income Taxes &nbsp;&nbsp;</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=329.4></TD><TD width=13.5></TD><TD width=64.5></TD><TD width=18></TD><TD width=64.5></TD></TR>
<TR><TD valign=top width=439.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B><U>2005</U></B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><U>2004</U></P>
</TD></TR>
<TR><TD valign=top width=439.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Loss before income taxes</P>
</TD><TD valign=top width=18><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>142,612</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>885,752</P>
</TD></TR>
<TR><TD valign=top width=439.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=457.2 colspan=2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Expected tax expense (recovery) at combined federal and provincial rate of 37.62% for 2005 and 38.62% for 2004</P>
</TD><TD valign=top width=86><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>(53,650)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(343,057)</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Increase (decrease) resulting from;</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Non deductible crown charges</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>40,693</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>53,525</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Provincial royalty deduction</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Resource allowance</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>(106,100)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(89,710)</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Statutory rate reduction</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.15pt; font-size:11pt" align=right><B>228,807</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.15pt; font-size:11pt" align=right>85,792</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Non-deductible DD&amp;A</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Other</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>(19,093)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>83,054</P>
</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Change in valuation allowance</P>
</TD><TD valign=top width=18>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>90,656</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>(210,396)</P>
</TD></TR>
<TR><TD valign=top width=439.2>&nbsp;</TD><TD valign=top width=18>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86>&nbsp;</TD></TR>
<TR><TD valign=top width=439.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Provision for deferred income taxes</P>
</TD><TD valign=top width=18><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=86><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR>
<BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">15</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">8.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">INCOME TAXES, CONTINUED</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:12.55pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>The temporary differences of the deferred income tax liability are as follows:</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=312></TD><TD width=18></TD><TD width=66></TD><TD width=18></TD><TD width=72></TD></TR>
<TR><TD valign=top width=416>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>2005</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>2004</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt">Deferred income tax assets</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Non-capital loss carry forwards</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(203,446)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Asset retirement obligation</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>(274,590)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(252,837)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Share issue costs</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>(1,522)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(4,904)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Investments</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>(519,866)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(578,451)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Other</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>(24,765)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(141,438)</P>
</TD></TR>
<TR><TD valign=top width=416>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right><B>(820,743)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-3.6pt; font-size:11pt" align=right>(1,181,076)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt">Deferred income tax liabilities</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Property and equipment</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>130,060</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>168,808</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt">Net deferred income tax (asset) liability before allowance</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>(690,683)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>(1,012,268)</P>
</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt">Deferred income tax valuation allowance</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>690,683</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>1,012,268</P>
</TD></TR>
<TR><TD valign=top width=416>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=416><P style="line-height:13pt; margin:0pt; padding-left:54pt; font-size:11pt">Net deferred income tax liability</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>United States Income Taxes</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Aspen&#146;s deferred tax assets (liabilities) consist of the following:</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=311.4></TD><TD width=18></TD><TD width=66></TD><TD width=18></TD><TD width=72></TD></TR>
<TR><TD valign=top width=415.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>2005</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Deferred tax liabilities:</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Accumulated depreciation</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B>$</B></P>
</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>90,955</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(67,000)</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Costs capitalized for books and deducted for tax</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Total deferred tax liabilities</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>90,955</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(67,000)</P>
</TD></TR>
<TR><TD valign=top width=415.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Deferred tax assets:</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Net operating loss carryforwards</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>5,907,645</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>17,720,000</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Costs expensed for books and capitalized for tax</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Total deferred tax assets</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>5,998,600</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>17,653,000</P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:36pt; font-size:11pt" align=justify>Less valuation allowance</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>(5,998,600)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(17,653,000) </P>
</TD></TR>
<TR><TD valign=top width=415.2><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>Net deferred tax liability</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=88><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>The difference from the expected income tax expense for the periods ended December 31, 2005 and 2004 at the statutory federal tax rate of 34% and the actual income tax expense is primarily the result of net operating loss carryforwards.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt" align=justify>At December 31, 2005, the Company has available United States net operating loss carryforwards of approximately $17,241,000 to reduce future taxable income. &nbsp;These carryforwards expire from 2022 to 2025.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">16</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">9.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">STOCKHOLDERS&#146; EQUITY</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>During the year 2005, 3,560,000 purchase warrants were exercised for $963,073. &nbsp;The Company also issued 1,000,000 million common shares from treasury to an employee who is a Director as part of the employees compensation plan, and has been expensed to the Company as a result of this transaction.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>On April 2, 2004, the Company completed a private placement of 12,000,000 Units at $.19 for net proceeds of $2,122,074. &nbsp;Each Unit is comprised of one common share and one-half of one common share purchase warrant with each whole common share purchase warrant exercisable for one common share at a price of $.19 until August 10, 2004. The common shares and warrants issued carry a four-month hold period under Canadian securities laws from the date of close.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>At December 31, 2005, exercise prices of options and warrants range from $.26 to $.98.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The following tables summarize the option and warrant activity for the periods ended December 31, 2005 and 2004:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR><TD width=19.2></TD><TD width=139.05></TD><TD width=19.2></TD><TD width=34.45></TD><TD width=19.2></TD><TD width=16.65></TD><TD width=19.2></TD><TD width=53.35></TD><TD width=19.2></TD><TD width=31.75></TD><TD width=19.2></TD><TD width=37.3></TD><TD width=19.2></TD><TD width=28.8></TD><TD width=19.2></TD></TR>
<TR><TD valign=top width=211 colspan=2>&nbsp;</TD><TD valign=top width=119.333 colspan=4>&nbsp;</TD><TD valign=top width=164.667 colspan=4><P style="margin:0pt" align=center><B><U>December 31, 2005</U></B></P>
</TD><TD valign=top width=164.933 colspan=5><P style="margin:0pt" align=center><U>December 31, 2004</U></P>
</TD></TR>
<TR><TD valign=top width=211 colspan=2>&nbsp;</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>Number</B></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>of </B></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B><U>Shares</U></B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>Weighted</B></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>Average</B></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>Exercise</B></P>
<P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B><U>Price</U></B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right>Number</P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right>of </P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right><U>Shares</U></P>
</TD><TD valign=top width=89.6 colspan=3><P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right>Weighted</P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right>Average</P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right>Exercise</P>
<P style="margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt" align=right><U>Price</U></P>
</TD></TR>
<TR><TD valign=top width=211 colspan=2>&nbsp;</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2>&nbsp;</TD><TD valign=top width=67.933 colspan=2>&nbsp;</TD><TD valign=top width=75.333 colspan=2>&nbsp;</TD><TD valign=top width=89.6 colspan=3>&nbsp;</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:13.2pt">Outstanding, beginning of period</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>7,389,284</B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><B>$.29</B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right>6,285,712</P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center>$.16</P>
</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:13.2pt">&nbsp;&nbsp;&nbsp;&nbsp;Granted to:</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2>&nbsp;</TD><TD valign=top width=67.933 colspan=2>&nbsp;</TD><TD valign=top width=75.333 colspan=2>&nbsp;</TD><TD valign=top width=64 colspan=2>&nbsp;</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:23.75pt">Employees, officers, directors</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B>1,300,000</B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><B>.24</B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right>1,000,000</P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center>.12</P>
</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:23.75pt">Others</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2>&nbsp;</TD><TD valign=top width=67.933 colspan=2>&nbsp;</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right>20,200,000</P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center>.22</P>
</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:23.75pt">Expired/canceled</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt; padding-right:-2.15pt" align=right><B>(3,625,713)</B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><B>.30</B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right>(271,428)</P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center>.97</P>
</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:23.75pt">Exercised</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B><U>(3,560,000)</U></B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><B><U>.27</U></B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><U>(19,825,000)</U></P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><U>.16</U></P>
</TD></TR>
<TR><TD valign=top width=25.6>&nbsp;</TD><TD valign=top width=211 colspan=2><P style="margin:0pt; padding-left:13.2pt">Outstanding, end of period</P>
</TD><TD valign=top width=71.533 colspan=2>&nbsp;</TD><TD valign=top width=47.8 colspan=2>&nbsp;</TD><TD valign=top width=96.733 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><B><U>1,503,571</U></B></P>
</TD><TD valign=top width=67.933 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><B><U>$.29</U></B></P>
</TD><TD valign=top width=75.333 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=right><U>7,389,284</U></P>
</TD><TD valign=top width=64 colspan=2><P style="margin:0pt; padding-left:-6.2pt; padding-right:-2.15pt" align=center><U>$.29</U></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">17</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">9.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">STOCKHOLDERS&#146; EQUITY, CONTINUED </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The 1,103,571 warrants and options were exercisable at December 31, 2005, the remaining 400,000 warrants are exercisable in April 2006, October 2006, April 2007 and October 2007. &nbsp;If not previously exercised, warrants and options outstanding at December 31, 2005 will expire as follows:</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=216></TD><TD width=114></TD><TD width=138></TD></TR>
<TR><TD valign=top width=288><P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt"><U>Year Ending December 31,</U></P>
</TD><TD valign=top width=152><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><U>Number of Shares</U></P>
</TD><TD valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><U>Weighted Average</U></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><U>Exercise Price</U></P>
</TD></TR>
<TR><TD valign=top width=288>&nbsp;</TD><TD valign=top width=152>&nbsp;</TD><TD valign=top width=184>&nbsp;</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">2006</P>
</TD><TD valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>3,571</P>
</TD><TD valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>$.98</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">2007</P>
</TD><TD valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD><TD valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">2008</P>
</TD><TD valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD><TD valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">2009</P>
</TD><TD valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>1,000,000</P>
</TD><TD valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>.30</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">2010</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>500,000</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=184><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>.26</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Total</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=152><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>1,503,571</P>
</TD><TD valign=top width=184>&nbsp;</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Presented below is a comparison of the weighted average exercise prices and market price of the Company&#146;s common stock on the measurement date for all warrants and stock options granted during the years ending December 31, 2005 and 2004:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=114></TD><TD width=54></TD><TD width=48></TD><TD width=48></TD><TD width=54></TD><TD width=42></TD><TD width=60></TD></TR>
<TR><TD valign=top width=152>&nbsp;</TD><TD valign=top width=200 colspan=3><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center><B><U>December 31, 2005</U></B></P>
</TD><TD valign=top width=208 colspan=3><P style="line-height:11pt; margin:0pt; font-size:9pt" align=center><U>December 31, 2004</U></P>
</TD></TR>
<TR><TD valign=top width=152>&nbsp;</TD><TD valign=top width=72><P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B>Number </B></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B>of<U> </U></B></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B><U>Shares</U></B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=center><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B>Exercise</B></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B><U>&nbsp;&nbsp;&nbsp;Price &nbsp;&nbsp;</U></B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=center><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B>Market</B></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><B><U>&nbsp;&nbsp;Price &nbsp;</U></B></P>
</TD><TD valign=top width=72><P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center>Number</P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center>of<U> </U></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><U>Shares</U></P>
</TD><TD valign=top width=56><P style="margin:0pt" align=center><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center>Exercise</P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><U>&nbsp;&nbsp;&nbsp;Price &nbsp;&nbsp;</U></P>
</TD><TD valign=top width=80><P style="margin:0pt" align=center><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center>Market</P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=center><U>&nbsp;&nbsp;Price &nbsp;</U></P>
</TD></TR>
<TR><TD valign=top width=152><P style="line-height:11pt; margin:0pt; padding-left:20.15pt; padding-right:-1.45pt; font-size:9pt">Fair value equal to exercise price</P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=56><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=152><P style="line-height:11pt; margin:0pt; padding-left:20.15pt; padding-right:-1.45pt; font-size:9pt">Fair value greater than exercise price</P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=56><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=152><P style="line-height:11pt; margin:0pt; padding-left:20.15pt; padding-right:-1.45pt; font-size:9pt">Exercise price greater than fair value</P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>1,506,571</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.29</B></P>
</TD><TD valign=top width=64><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.26</B></P>
</TD><TD valign=top width=72><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>21,200,000</B></P>
</TD><TD valign=top width=56><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.29</B></P>
</TD><TD valign=top width=80><P style="margin:0pt" align=right><BR></P>
<P style="line-height:11pt; margin:0pt; padding-left:-2.15pt; padding-right:-2.15pt; font-size:9pt" align=right><B>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.29</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Stock Based Compensation</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company has two stock-based compensation plans. At December 31, 2005, 2,500,000 shares were reserved for issuance under these plans. &nbsp;Under the Non-Employee Directors Stock Option Plan, options are granted to certain non-employee directors at prices greater than or equal to the market price of the Company&#146;s stock on the date of grant. &nbsp;The maximum term of the option is 10 years, and they vest according to the terms of the individual options granted. &nbsp;All options must be granted prior to February 26, 2011, the date the Plan will terminate. &nbsp;Options may be granted at any time prior to its termination. &nbsp;Any option outstanding under the plan at the time of its termination, remains in effect until the option is exercised or expires. Under the 2001 Stock Compensation Plan, options and stock appreciation rights are granted to certain officers, directors, employees and advisors at prices greater than or equal to the market price of the Company&#146;s stock on the date of grant. &nbsp;The maximum term of the option is 10 years, and they vest according to the terms of the individual options granted. &nbsp;All options must be granted prior to February 26, 2011, the date the Plan will terminate. &nbsp;Options may be granted at any time prior to its termination. &nbsp;Any option outstanding under the plan at the time of its termination, remains in effect until the option is exercised or expires. &nbsp;Stock appreciation rights may be issued with stock options or separately, at the discretion of the Compensation Committee. &nbsp;At December 31, 2005, no stock appreciation rights had been granted.</P>
<P style="margin:0pt" align=justify><BR>
<BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">18</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">10.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">TRANSACTIONS WITH AFFILIATES</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Legal expenses of approximately $69,100 and $137,000 were expensed to firms of which an officer or director of the Company is a partner during the years ended December 31, 2005 and 2004, respectively. </P>
<P style="margin:0pt" align=justify><BR></P>
<A NAME="node9"></A><P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Evinco Exploration Inc. (Evinco)<B> </B>is related by a common director, Dennis Besler. &nbsp;Evinco owes $263,277 (Canadian) to the Company (2004 - $263,277 (Canadian)) for oil &amp; gas operating costs. &nbsp;The Company has taken an allowance for doubtful accounts for the full amount in 2004 for this receivable. &nbsp;In 2005 Evinco has gone into receivership.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">11.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">CONCENTRATION OF CREDIT RISK</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. &nbsp;The Company maintains its cash with banks primarily in Oklahoma City, Oklahoma, Eldorado, Kansas and Calgary, Alberta. &nbsp;The terms of these deposits are on demand to minimize risk. &nbsp;The Company has not experienced any losses related to these cash deposits and believes it is not exposed to any significant credit risk.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Accounts receivable consist of uncollateralized receivables from domestic and international customers primarily in the oil and gas industry. &nbsp;To minimize risk associated with international transactions, all sales are denominated in U.S. currency. &nbsp;The Company routinely assesses the financial strength of it customers. &nbsp;The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. &nbsp;If amounts become uncollectible, they will be charged to operations when that determination is made.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">12.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">EMPLOYEE BENEFIT PLAN</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company has established a salary deferral plan under Section 401(k) of the Internal Revenue Code. &nbsp;The plan allows eligible employees to defer a portion of their compensation. &nbsp;Such deferrals accumulate on a tax-deferred basis until the employee withdraws the funds. &nbsp;The plan provides for contributions by the Company in such amounts as the Board of Directors may determine annually. &nbsp;The Company made a $12,878 contribution for the year ended December 31, 2005, but made no contribution for the year ended December 31, 2004.</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">19</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">13.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">COMMITMENTS AND CONTINGENCIES</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify><I><U>Letters of Credit</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>At December 31, 2005 and 2004, the Company had $100,000 and $151,000 of outstanding letters of credit, respectively.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify><I><U>Leases</U></I></P>
<P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>The Company conducts its operations utilizing leased facilities under long-term lease agreements, classified as operating leases. &nbsp;The Company also leases certain equipment and vehicles under operating leases. &nbsp;Certain leases provide that the Company pay taxes, maintenance, insurance and certain other operating expenses and contain purchase options. &nbsp;During the year the Company signed a new three year office lease for their premises. &nbsp;Future lease payments consist of the following at December 31,:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.8></TD><TD width=16.3></TD><TD width=41.05></TD></TR>
<TR><TD valign=top width=43.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>2006</P>
</TD><TD valign=top width=21.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD valign=top width=54.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=right>21,346</P>
</TD></TR>
<TR><TD valign=top width=43.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>2007</P>
</TD><TD valign=top width=21.733>&nbsp;</TD><TD valign=top width=54.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=right>21,346</P>
</TD></TR>
<TR><TD valign=top width=43.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>2008</P>
</TD><TD valign=top width=21.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=54.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=right>7,115</P>
</TD></TR>
<TR><TD valign=top width=43.733>&nbsp;</TD><TD valign=top width=21.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=54.733><P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>49,807</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify><I><U>Environmental Matters</U></I></P>
<P style="line-height:12.55pt; margin:0pt; font-size:11pt" align=justify>The Company is engaged in oil and gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to the drilling of oil and gas wells and the operation thereof. &nbsp;Although environmental assessments are conducted on all purchased properties, in the Company&#146;s acquisition of existing or previously drilled well bores, the Company may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated. &nbsp;Should it be determined that a liability exists with respect to any environmental clean up or restoration, the liability to cure such a violation could fall upon the Company. &nbsp;No claim has been made, nor is the Company aware of any liability, which it may have, as it relates to any environmental clean up, restoration or the violation of any rules or regulations relating thereto. &nbsp;Liabilities for expenditures are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt"><I><U>Litigation</U></I></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company and its subsidiaries, in the normal course of operations, are sometimes named as defendants in litigation. &nbsp;The nature of these claims is related to disputes arising from services provided by outside contractors or for delinquent payments. &nbsp;The Company does not expect that the results of any of these proceedings will have a material adverse effect on the Company&#146;s financial position.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The Company and its subsidiaries are also involved in lawsuits with former officers, former directors, former shareholders and entities owned or controlled by these parties, and certain other parties with whom the Company may have had business relationships. &nbsp;Allegations against the Company include liabilities for guarantees, promissory notes, unpaid compensation, and violations of employment contracts, failure to pay royalties, and Canadian income tax reassessments due to flow-through share transactions. &nbsp;The Company is vigorously defending these actions and in certain cases has filed counter suits against these parties. &nbsp;The settlement terms of certain litigation included a provision for the conditional release of a final settlement payment of $1.3 million from the Company if it has not filed for protection under the US Bankruptcy Code prior to May 9, 2006. &nbsp;The Company is unable to predict the outcome of these matters, but does not believe, based upon currently available facts, that the ultimate resolution of such matters will have a material adverse effect on the consolidated financial statements of the Company.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">14.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">EARNINGS PER SHARE</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The following data show the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of dilutive potential common stock.</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=216></TD><TD width=13></TD><TD width=77></TD><TD width=13></TD><TD width=77></TD></TR>
<TR><TD valign=top width=288>&nbsp;</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>2005</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=top width=288>&nbsp;</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667>&nbsp;</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667>&nbsp;</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Net comprehensive loss</P>
</TD><TD valign=top width=17.333><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>(3,576,915)</B></P>
</TD><TD valign=top width=17.333><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(19,355,305)</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Effect of dilutive securities</P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Net comprehensive loss after effect of dilutive securities</P>
</TD><TD valign=top width=17.333><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right><B>(3,576,915)</B></P>
</TD><TD valign=top width=17.333><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; padding-right:-2.9pt; font-size:11pt" align=right>(19,355,305)</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Weighted average number of common</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;shares used in basic earnings per share </P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>74,179,636</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>64,522,558</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;Special warrants</P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;Convertible debt</P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;Stock options and warrants</P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>-</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:0.75pt solid #000000" valign=top width=102.667><P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=288><P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">Weighted average number of common</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;shares and dilutive potential common</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;stock used in diluted earnings per share</P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right><B>74,179,636</B></P>
</TD><TD valign=top width=17.333>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=102.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=right>64,522,558</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Options and warrants to purchase approximately 1,503,571 shares of the Company&#146;s common stock, with exercise prices ranging from $0.26 to $.98, were excluded from the December 31, 2005 diluted earnings per share calculation because their effects were antidilutive. &nbsp;Options and warrants to purchase approximately 7,389,284 shares of the Company&#146;s common stock, with exercise prices of ranging from $0.23 to $0.98, were excluded from the December 31, 2004 diluted earnings per share calculation because their effects were antidilutive.</P>
<P style="margin:0pt" align=justify><BR>
<BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">20</P>
<P style="margin:0pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt; page-break-before:always" align=center><B>ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:7.2pt; padding-right:-6.3pt; font-size:11pt" align=center><B>(Expressed in US Dollars)</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">15.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">DISCONTINUED OPERATIONS</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>On October 15, 2004 the parent company and two subsidiaries closed on a transaction to sell all of their United States domiciled oil and gas properties. &nbsp;Operations have been stated as discontinued as of December 31, 2004. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>The operating results are shown separately in the accompanying consolidated statements of operations. &nbsp;The net loss was $2,312,543 for the year ended December 31, 2004. &nbsp;These amounts are not included in net sales in the accompanying consolidated financial statements. &nbsp;No provisions for costs associated with the discontinuation of these operations were considered necessary at December 31, 2004.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Assets and liabilities of these operations to be disposed of are as follows at December 31,:</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27.35pt; padding-right:4.5pt; text-indent:339.65pt; font-size:11pt" align=justify><B><U>2005</U></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:27.35pt; padding-right:4.5pt; text-indent:434.15pt; font-size:11pt" align=justify><U>2004</U></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; padding-right:4.5pt; font-size:11pt" align=justify>ASSETS</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:4.5pt; font-size:11pt" align=justify>Accounts receivable</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:4.5pt; text-indent:315pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:4.5pt; text-indent:383.35pt; font-size:11pt" align=justify><B><U>-</U></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:4.5pt; text-indent:405pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; padding-right:4.5pt; text-indent:437.5pt; font-size:11pt" align=justify><U>1,281,037</U></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:315pt; font-size:11pt" align=justify><B><U>$</U></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:383.35pt; font-size:11pt" align=justify><B><U>-</U></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:405pt; font-size:11pt" align=justify><U>$</U></P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; padding-right:2.7pt; text-indent:437.5pt; font-size:11pt" align=justify><U>1,281,037</U></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; padding-right:2.7pt; font-size:11pt" align=justify>LIABILITIES</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; font-size:11pt" align=justify>Accounts payable &#150; trade</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:315pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:383.35pt; font-size:11pt" align=justify><B>-</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:405pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; padding-right:2.7pt; text-indent:445.75pt; font-size:11pt" align=justify>771,367</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; font-size:11pt" align=justify>Accrued expenses and other liabilities</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:351.25pt; font-size:11pt" align=justify><B><U>192,359</U></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; padding-right:2.7pt; text-indent:445.75pt; font-size:11pt" align=justify><U>287,706</U></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:315pt; font-size:11pt" align=justify><B><U>$</U></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:351.25pt; font-size:11pt" align=justify><B><U>192,359</U></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27pt; padding-right:2.7pt; text-indent:405pt; font-size:11pt" align=justify><U>$</U></P>
<P style="line-height:13pt; margin:0pt; padding-left:27pt; padding-right:2.7pt; text-indent:437.5pt; font-size:11pt" align=justify><U>1,059,073</U></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; padding-right:2.7pt; font-size:11pt" align=justify>Net assets (liabilities) of discontinuing operations</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; padding-right:2.7pt; text-indent:324pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; padding-right:2.7pt; text-indent:352.95pt; font-size:11pt" align=justify><B>(192,359)</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; padding-right:2.7pt; text-indent:414pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; padding-right:2.7pt; text-indent:454.75pt; font-size:11pt" align=justify>221,964</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Assets and liabilities are shown at their expected net realizable values. &nbsp;Net assets (liabilities) to be disposed of have been separately classified in the accompanying consolidated balance sheets at December 31, 2004.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=justify>Approximate cash flows of discontinued operations consisted of the following for the years ended December 31,:</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:27.35pt; padding-right:4.5pt; text-indent:339.65pt; font-size:11pt" align=justify><B><U>2005</U></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:27.35pt; padding-right:4.5pt; text-indent:430.4pt; font-size:11pt" align=justify><U>2004 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:9pt; font-size:11pt" align=justify>Net cash provided by operating activities</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:324pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:360.25pt; font-size:11pt" align=justify><B>414,323</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:414pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:454.75pt; font-size:11pt" align=justify>330,000</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:9pt; font-size:11pt" align=justify>Net cash used in investing activities</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:324pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:392.35pt; font-size:11pt" align=justify><B>-</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:414pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:441pt; font-size:11pt" align=justify>38,925,000</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:9pt; font-size:11pt" align=justify>Net cash used in financing activities</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:324pt; font-size:11pt" align=justify><B>$</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:392.35pt; font-size:11pt" align=justify><B>-</B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:18pt; text-indent:414pt; font-size:11pt" align=justify>$</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:433.7pt; font-size:11pt" align=justify>(11,404,503)</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">16.</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">SUBSEQUENT EVENTS</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt">Subsequent to the balance sheet date the Company has renewed their credit facility at their bank. &nbsp;The term is a $857,700 revolving line of credit at 1.5% interest above prime. &nbsp;The loan shall be permanently reduced in 13 equal monthly amounts of $64,327 commencing on April 1, 2006. &nbsp;As of this report date no amounts have been drawn against the loan.</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; text-indent:238.55pt; font-size:12pt">21</P>
<P style="margin:0pt"><BR></P>
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<FILENAME>f2005yeaspengroupmda.htm
<DESCRIPTION>MANAGEMENT'S DISCUSSION & ANALYSIS
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<TITLE>ASPEN GROUP RESOURCES CORPORATION</TITLE>
<META NAME="author" CONTENT="Kati Ross">
<META NAME="date" CONTENT="03/31/2006">
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><FONT FACE="Times New Roman"><B>ASPEN GROUP RESOURCES CORPORATION</B></FONT></P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS</B></P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The following discussion should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2005 and the accompanying notes. &nbsp;Aspen Group Resources Corporation&#146;s financial statements have been prepared using US GAAP. &nbsp;Aspen&#146;s reserves have been reported in accordance with the respective SEC and National Instrument 51-101 guidelines.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>This discussion contains certain forward-looking statements based on current expectations. &nbsp;These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward &#150;looking statements. &nbsp;Management has prepared this discussion to help investors understand the financial results of the Company in the broader context.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen&#146;s results are reported on a consolidated basis in US dollars.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen Group Resources Corporation (&#147;Aspen&#148; or the &#147;Company&#148;) is an independent energy company engaged in the acquisition, exploration, development and operations of oil and gas properties with a geographic focus in North America.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>On April 1, 2004 Aspen and Westchester Resources Inc. (TSXV:WSR) (&#147;Westchester&#148;) entered into a 50/50 Joint Venture Agreement (the &#147;Joint Venture&#148;) to acquire, explore and develop oil and gas properties in Canada until December 31, 2004. &nbsp;The first acquisition under this agreement was the Southern Saskatchewan Properties (see Canada &#150; Joint Venture Properties). &nbsp;Subsequent to this acquisition, effective October 26, 2004, Aspen and Westchester extended their Joint Venture agreement until April 30, 2009 and amended it to include projects throughout North America. &nbsp;Under the terms of the agreement, Aspen will act as operator for all projects.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Canada &#150; Joint Venture Properties</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><U>Saskatchewan </U></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen and its Joint Venture partner Westchester hold a total of 82 contiguous sections (52,533 acres) of Crown leases in Southern Saskatchewan. &nbsp;The Joint Venture properties (the &#147;Properties&#148;) are located east of an extensive area that contains major resources of natural gas of biogenic origin trapped in tight upper cretaceous shelf sediments. &nbsp;These types of shallow gas reservoirs have been extensively developed in Southeastern Alberta, Southwestern Saskatchewan, and Montana. &nbsp;The biogenic gas is primarily methane, contains no liquid hydrocarbons, and is basically of pipeline quality. &nbsp;Due to a shortage of available drilling rigs and capital, the Joint Venture has not been able to continue to drill on its acreage. &nbsp;Licenses not converted to leases are scheduled to expire in April, June and August of 2006. &nbsp;The Joint Venture has been unsuccessful to date in extending the term of the licenses scheduled to expire.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><U>Manitoba</U></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen and its Joint Venture partner hold a total of 7 leases totaling approximately 2700 acres in the Daly Field, Manitoba. &nbsp;The Daly oil field was discovered in 1951 and with oil in place of 150 mm barrels it is the largest oil field in Manitoba. &nbsp;It produces 32 degree API light oil (marketed as Cromer oil after the Cromer oil terminal) from the Mississippian Lodgepole Formation at an average depth of 2400 feet. &nbsp;Approximately 80 percent of the oil has been produced from the Middle Daly Member with the balance of the production coming from other members within the Lodgepole Formation, which includes the Upper Daly Member and the Cruickshank Crinoidal Facies.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Consulting geologists estimate that the leases contain approximately 25 additional drill locations that can support multiple wells on each location. &nbsp;The Joint Venture has consulted with third party engineers to prepare a drilling plan in order to further develop the acreage and is currently awaiting delivery of a drill rig to resume drilling operations in the area.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Canada &#150; Non-Joint Venture Properties</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Exclusive of the Joint Venture with Westchester, Aspen operates through its wholly owned subsidiary Aspen Endeavour and has properties in Alberta and southern Saskatchewan, both in an operator and non-operator position. &nbsp;Aspen operates 4 wells with and average working interest of forty-seven percent (47%) and has an average working interest of twenty-two percent (22%) in 134 non-operates properties. &nbsp;In 2004 the properties produced at an average rate of 326 boepd.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><U>Saskatchewan</U></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen Endeavour owns an interest in the Butte, <A NAME="OLE_LINK1"></A>Saskatchewan area, which is located approximately 55 km west of Swift Current. &nbsp;This area consists of 11 wells that are tied in and under a water flood program to increase reservoir performance with a working interest range from 32.92% to 35%.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><U>Alberta</U></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Namaka area is located in Southeastern Alberta approximately 35 km east of Calgary. &nbsp;Aspen Endeavour holds between 50% and 56% working interest in the lands with 24 producing gas wells in the area. &nbsp;Aspen Endeavour is currently working with Siksika Indian Nation to increase their land holdings in the area.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen Endeavour holds interests ranging from 19% to 100% in various other properties in Alberta and Saskatchewan and is actively pursuing potential farm-in partners in order to reduce the risk and further develop the areas.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>United States &#150; Joint Venture Properties</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>In 2004 Aspen, through the Joint Venture arrangement with Westchester entered into a multi-well farm-in agreement with Oil for America, Inc. (&#147;OFA&#148;) in North Dakota.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>OFA, in association with the Joint Venture have leased lands for several locations in North Dakota. &nbsp;The target in North Dakota is the Lodgepole formation in Stark County.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Significant Events</B></P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Manitoba</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>To the date the Joint Venture has drilled three horizontal wells in the Daly Field in Manitoba. &nbsp;Each well encountered potential productive zones in the Lodgepole and Bakken formations. &nbsp;Construction and tie-in of the temporary surface gathering facilities for the two productive wells, consisting of two production tanks per well, have been completed. &nbsp;The wells were put into production in October of 2005. &nbsp;A review is currently underway to design and construct certain surface facilities to manage and dispose of associated water volumes associated with the production of this oil. &nbsp;The Joint Venture has shut-in the non-productive well and is currently evaluating several options, including re-entering the well and drilling a second leg in the same zone or in one of the other productive zones encountered in the vertical portion of the well bore.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>As announced on February 7, 2006, the Joint Venture has contracted a drilling rig through Ensign Drilling and expects drilling operations to recommence during the first week of April 2006. &nbsp;During this phase of drilling, the Joint Venture anticipates drilling up to six horizontal wells in various locations on its acreage.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>United States</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Joint Venture completed drilling and testing of the first well under the agreement with OFA on March 24, 2005 in North Dakota. &nbsp;The Froelich 1-27, located in Stark County, North Dakota was drilled to a target depth of 9,645 feet. &nbsp;The well was cased and completed for testing. &nbsp;The initial tests of the upper portion of the well bore indicated no commercial quantities of oil and gas. &nbsp;Under advisement of consulting geologists, the well was drilled using a service rig to a depth of 9,817 feet. &nbsp;Within that depth, three intervals were tested and no commercial quantities of oil and gas were encountered. &nbsp;In addition, a fourth interval located behind casing at approximately 9,300 feet was tested and no commercial quantities of oil and gas were encountered. &nbsp;The Froelich 1-27 well was capped and abandoned.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>In 2004, Aspen negotiated the sale of virtually all of its US oil and gas producing assets for $22 million less closing adjustments. &nbsp;The sale price was within the average of similar transactions for these types of assets but less that the estimated reserve value of the assets. &nbsp;Therefore Aspen recorded a loss on the disposal of $15.8 million.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The transaction had a closing date of October 15, 2004 and an effective date of June 1, 2004. &nbsp;Therefore, Aspen only received revenue and incurred expenses from these assets for 5 months in 2004. &nbsp;Results from the divested assets are indicated throughout the financial statements. &nbsp;(See Discontinued Operations on page 5 of the MD&amp;A).</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>With this sale Aspen has discontinued all of its oil and gas operations in the US, except its exploration activities in North Dakota and the operations of its wholly owned subsidiary, United Cementing and Acidizing Co. Inc., and the financial statements reflect such discontinuance.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Results from Continuing Operations</B></P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Revenues </B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen&#146;s gross revenue were $3.9 million for the year ended December 31, 2005 compared to $3.6 million for the same period in 2004. &nbsp;The increase is primarily the result of higher sustained commodity prices. &nbsp;Oil field service revenue from Aspen&#146;s wholly owned subsidiary, United Cementing and Acidizing Co. Inc. (&#147;United&#148;), decreased 13 percent to $900,000.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Production</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Gross production in the twelve-month period ending December 31, 2005 decreased to an average of 265 boe (barrel of oil equivalent) as compared to 326 boe/d in 2004. &nbsp;The decline in production is primarily due to the natural decline curve of the producing properties. &nbsp;Aspen&#146;s production mix in 2005 was 61.6 percent gas and 38.4 percent oil. &nbsp;Aspen&#146;s production exit rate at December 21, 2005 was 266 boe/d.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Oil and Gas Production Expense</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Oil and Gas production expense increased from $1.2 million in 2004 to $1.4 million in 2005. &nbsp;The increase is attributable to higher lifting field costs.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Operating Expenses</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Operating Expenses are costs associated with United&#146;s operations, excluding general and administrative expenses. &nbsp;For 2005 operating expenses decreased to $735,000 from $850,000 for the same period in 2004. &nbsp;The decrease was attributable to a reduction in work projects.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>General and Administrative Expense</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>General and administrative expense (G&amp;A) decreased from $3.9 million 2004 to $3.1 million in 2005. &nbsp;The decrease is due to a reduction of staff from closing the US operations.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Depletion and Depreciation</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Depletion, depreciation and amortization increased in the twelve-month period from $1.8 million in 2004 to $2.7 million in 2005. &nbsp;The increase was due to a $1.1 million asset impairment write-down of the Company&#146;s United States oil and gas properties in 2005.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt; page-break-before:always" align=justify><B>Interest Expense</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Expenses associated with interest and financing decreased from $65 thousand in 2004 to $39 thousand in 2005 due to the reduction of Canadian debt.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Income/Loss Per Share</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>In 2005, Aspen recorded a loss from continuing operations of 4.2 million, or $0.06 per share versus a loss of $19.0 million, or $0.06 per share in 2004.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>In 2004 as previously noted, Aspen was required to take a one-time, non-cash write-down from the sale of its US assets of $15.8 in 2004. &nbsp;Including the effect of the write-down and minor adjustments for gains on the sale of other assets and tax recoveries, Aspen recorded a net loss of $19.1 million or $0.30 per share in 2004.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Cash Flow</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Cash flow from operations (before changes in working capital) increased $400 thousand from 2004. &nbsp;The increase in cash flow is attributable to higher commodity prices the Company received &nbsp;from oil and gas sales in 2005.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Capital Expenditures</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Capital additions, excluding acquisitions and divestitures for the year ended December 31, 2005 were $3.8 million compared to $2.3 for the same period in 2004. &nbsp;This is attributable to the increased drilling activity in North Dakota and Manitoba.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Discontinued Operations</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>On July 7, 2004, Aspen announced that it had has signed a binding Letter of Intent (LOI) with Crusader Energy Corporation (&#147;Crusader&#148;), an Oklahoma based produced and development company, to sell it U.S. oil and gas assets for approximately $22 million cash, pending closing adjustments. &nbsp;The transaction had an effective date of June 1, 2004 and closed on October 15, 2004. &nbsp;The sale included virtually all of Aspen&#146;s U.S. oil and gas production and reserves, which were approximately 600 boepd (3,600 mcfepd) of production and approximately 4.4 million boe (26.4 bcfe) of proven reserves. &nbsp;The producing reserves were comprised of over 800 wells scattered throughout Oklahoma and Texas with small working interest, and in some cases, significant environmental issues. &nbsp;Aspen&#146;s wholly owned subsidiary United Cementing and Acidizing Co. Inc., was not included in the sale.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>From the proceeds of the sale Aspen allocated $2.7 million to Crusader for closing adjustments such as title defects, well imbalancing and environmental issues. &nbsp;In addition, $8.7 million of proceeds from the sale were used to retire the Company&#146;s outstanding US bank debt. &nbsp;An additional $950 thousand was used to pay down an outstanding loan with Quest Capital Corp.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen retained approximately 325 boe/day of production from its Canadian properties and has applied the remainder of the proceeds to pursue exploration and development projects in Canada and the U.S.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Company made additional divestitures of non-core or non-economic properties in 2004 totaling $400 thousand.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Equity</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>During the year 2005, 3,560,000 purchase warrants were exercised for $963,073. &nbsp;The Company also issued an employee whom also is a Director 1,000,000 common shares from treasury as part of the employees compensation plan, $312,280 has been expensed to the Company.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>On April 5, 2004, Aspen completed a private placement of 12 million special warrants for total proceeds of $2.3 million. &nbsp;Each special warrant was convertible for no additional consideration into units, with each unit consisting of one share and one half-share purchase warrant. &nbsp;Each whole warrant was exercisable for 12 months at Cdn $0.35 to acquire one share. &nbsp;The shares and warrants carried a four-month hold period from the closing date. &nbsp;As the expiry date of the warrants on March 31, 2005 the company had issued an additional 3,495,500 common shares from warrants issued from this offering for proceeds of $978 thousand. &nbsp;The remaining 2,504,500 expired unexercised.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Financial Results and Liquidity</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>For the year ended December 31, 2005, Aspen reported positive working capital of $.4 million versus a $3.8 million in working capital in 2004. &nbsp;The decrease in working capital is due to the drilling activity in 2005.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Company anticipates that it has sufficient working capital and cash flow to fund its current drilling commitments. &nbsp;Any new or expanded drilling programs may require that the Company raise additional capital through the issuance of equity in order to meet those capital requirements.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Transactions with Related Parties</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Legal expenses of approximately $69 thousand and $130 thousand were paid to a legal firm of which an officer or director of the Company is a partner during the years ended December 31, 2005 and 2004 respectively.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Reserves</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The independent reserve engineering reports for Aspen&#146;s reserves were prepared and are presented under the respective SEC and NI 51-101 guidelines. &nbsp;The reserve data and future estimates presented in the following table are for Proved Reserves as at December 31, 2005 in US dollars on a constant price case basis. &nbsp;Neither evaluation assigns any values for probable reserves. &nbsp;In addition, no reserve value have been assigned to the new Joint Venture properties Saskatchewan or North Dakota.</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=152.2></TD><TD width=11.8></TD><TD width=48.65></TD><TD width=13.6></TD><TD width=55.35></TD><TD width=11.8></TD><TD width=68></TD><TD width=12.9></TD><TD width=74.9></TD></TR>
<TR><TD style="border:0.5pt solid #000000" valign=top width=202.933><P style="line-height:11pt; margin:0pt; font-size:9pt" align=justify><I>In US dollars at December 31, 2005</I></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867>&nbsp;</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=202.933><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><B>Reserve Category</B></P>
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</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867><P style="margin:0pt" align=justify><B>Net Oil</B></P>
<P style="margin:0pt" align=justify><B>(Bbls)</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8><P style="margin:0pt" align=justify><B>Net Gas</B></P>
<P style="margin:0pt" align=justify><B>(Mcf)</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt" align=justify><B>Future Net</B></P>
<P style="margin:0pt" align=justify><B>Revenue ($)</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867><P style="margin:0pt" align=justify><B>Discounted</B></P>
<P style="margin:0pt" align=justify><B>Future Net</B></P>
<P style="margin:0pt" align=justify><B>Revenue ($) </B></P>
<P style="margin:0pt" align=justify><B>@ 10% Discount</B></P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=202.933><P style="margin:0pt" align=justify>Proved Developed Producing</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867><P style="margin:0pt" align=justify>113,900</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8><P style="margin:0pt" align=justify>958,928</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt" align=justify>6,770,000</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867><P style="margin:0pt" align=justify>5,438,000</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=202.933><P style="margin:0pt" align=justify>Proved Developed Non-</P>
<P style="margin:0pt" align=justify>Producing</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>0</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>0</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>0</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>0</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=202.933><P style="margin:0pt" align=justify>Probable</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867><P style="margin:0pt" align=justify>48,400</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8><P style="margin:0pt" align=justify>439,348</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt" align=justify>3,184,000</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867><P style="margin:0pt" align=justify>1,657,000</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=202.933><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><B>TOTAL</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=64.867><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>162,300</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=18.133>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=73.8><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>1,398,276</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>9,954,000</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=17.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=99.867><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>7,095,000</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The 2005 reserve values are calculated on a PV-10 basis using $61.24 per barrel for oil (Cdn. $67.25) and $8.06 per mcf for gas (Cdn. $9.38). &nbsp;Based on Proved Developed Producing reserves only and current production levels. &nbsp;Aspen&#146;s reserve life index is approximately 7 years.</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=110.7></TD><TD width=110.7></TD><TD width=110.7></TD><TD width=110.7></TD></TR>
<TR><TD style="border:0.5pt solid #000000" valign=top width=147.6><P style="line-height:11pt; margin:0pt; font-size:9pt" align=justify><I>In US Dollars</I></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><B>Cost</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><B>Accumulated</B></P>
<P style="margin:0pt" align=justify><B>Depletion and</B></P>
<P style="margin:0pt" align=justify><B>Depreciation</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><B>Net Book Value</B></P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><B>2005 Petroleum &amp;</B></P>
<P style="margin:0pt" align=justify><B>Natural Gas</B></P>
<P style="margin:0pt" align=justify><B>Properties</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=center><B>26,083,995</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=center><B>(19,404,018)</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=center><B>6,679,977</B></P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6>&nbsp;</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=justify><B>2004 Petroleum &amp;</B></P>
<P style="margin:0pt" align=justify><B>Natural Gas </B></P>
<P style="margin:0pt" align=justify><B>Properties</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><B>18,824,918</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><B>13,738,929</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=147.6><P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><B>5,085,989</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Legal Proceedings</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Company is a named defendant in a number of legal proceedings, which are described within the notes to the audited financial statements. &nbsp;Refer to Notes to the Consolidated Financial Statements &#150; Note 12 &#147;Commitments and Contingencies&#148;.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>Business Risks</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Holders of the Common Stock and future investors in the Company should be aware of the following factors in evaluating their investment in Aspen.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The marketability and price of products owned or that may be acquired or discovered by Aspen will be affected by numerous factors beyond the Company&#146;s control. &nbsp;Aspen must compete in all aspects of its operations with a number of other corporation that have equal or greater technical or financial resources. &nbsp;Aspen is also subject to market fluctuations in the prices or products, exchange rates, uncertainties related to the proximity of its reserves to pipelines and processing facilities and extensive governmental regulations.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen will face different risks and uncertainties with oil and gas exploration and development, some of which are not always within the control of Aspen.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Operational risks include finding and developing oil and natural gas reserves on an economic basis, marketing production, hiring and retaining employees and conducting operations in a cost effective manner. &nbsp;Aspen mitigates these risks by concentrating in a limited number of areas with low cost exploration and development objectives, by ensuring that the Aspen employees are highly qualified and motivated to achieve success and to support long-term relationships with its service providers to ensure quality service is available through all business cycles. &nbsp;Insurance against well pollution, well blowouts and other forms of assets destruction will be employed as appropriate.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Financial risks include commodity prices, interest rates and the U.S./Canadian exchange rate, all of which are beyond the control of Aspen. &nbsp;Aspen will address these risks by employing price hedges as appropriate and minimizing interest rate risk through prudent management of cash flow, bank and equity financing.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>The Company is a named defendant in a number of legal proceedings, which are described within the notes to the audited financial statements.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Aspen&#146;s balance sheet has improved significantly with the elimination of the US debt in 2004. &nbsp;With this financial burden eliminated with working capital and cash flow, the Company has the financial flexibility to invest in exploration activities.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>ceocertificate.htm
<DESCRIPTION>CERTIFICATE
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>ASPEN GROUP RESOURCES CORPORATION</TITLE>
<META NAME="author" CONTENT="Joan Moody">
<META NAME="date" CONTENT="04/19/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:normal; margin-top:3.3pt; margin-bottom:0pt; font-family:Bookman Old Style; font-size:12pt" align=center><FONT FACE="Bookman Old Style" COLOR=#000000><B>ASPEN GROUP RESOURCES CORPORATION<BR>
FORM 52-109F1<BR>
</B></FONT><FONT FACE="Times New Roman"><B>Certification of Annual Filings</B></FONT></P>
<P style="line-height:13pt; margin-top:4.95pt; margin-bottom:0pt; text-indent:68.4pt; font-size:11pt" align=justify><FONT FACE="Times New Roman">I, Robert L. Calentine, Chief Executive Officer of </FONT><B>Aspen Group Resources Corporation, </B>certify that:</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; font-size:11pt" align=justify>1.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 <I>Certification of Disclosure in Issuers' Annual and Interim Filings) </I>of Aspen Group Resources Corporation (the <B>&quot;Issuer&quot;) </B>for the period ending December 31, 2005;</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; font-size:11pt" align=justify>2.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; font-size:11pt" align=justify>3.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the annual filings; and</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; font-size:11pt">4.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt">The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the Issuer, and we have:</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; padding-left:68.4pt; text-indent:-36pt; font-size:11pt" align=justify>(a)</P>
<P style="line-height:13pt; margin:0pt; padding-left:68.4pt; font-size:11pt" align=justify>designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared; and</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; padding-left:68.4pt; text-indent:-36pt; font-size:11pt" align=justify>(b)</P>
<P style="line-height:13pt; margin:0pt; padding-left:68.4pt; font-size:11pt" align=justify>evaluated the effectiveness of the Issuer's disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the Issuer to disclose in the annual MD&amp;A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.</P>
<P style="line-height:normal; margin-top:13.2pt; margin-bottom:0pt; font-size:11pt" align=justify><B>DATED </B>March 31<FONT FACE="Garamond">, </FONT>2006</P>
<P style="line-height:13pt; margin-top:8.25pt; margin-bottom:0pt; padding-left:162pt; font-size:11pt"><B>ASPEN GROUP RESOURCE CORPORATION</B></P>
<P style="line-height:13pt; margin-top:8.25pt; margin-bottom:0pt; padding-left:162pt; font-size:11pt">&#147;signed&#148;</P>
<P style="margin-top:8.25pt; margin-bottom:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:162pt; font-size:11pt">Robert L. Calentine<B> </B></P>
<P style="line-height:13pt; margin:0pt; padding-left:162pt; font-size:11pt">Chief Executive Officer</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>cfocertificate.htm
<DESCRIPTION>CERTIFICATE
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>ASPEN GROUP RESOURCES CORPORATION</TITLE>
<META NAME="author" CONTENT="Joan Moody">
<META NAME="date" CONTENT="04/19/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:normal; margin-top:3.3pt; margin-bottom:0pt; font-family:Bookman Old Style; font-size:12pt" align=center><FONT FACE="Bookman Old Style" COLOR=#000000><B>ASPEN GROUP RESOURCES CORPORATION<BR>
FORM 52-109F1<BR>
</B></FONT><FONT FACE="Times New Roman"><B>Certification of Annual Filings</B></FONT></P>
<P style="line-height:13pt; margin-top:4.95pt; margin-bottom:0pt; text-indent:68.4pt; font-size:11pt" align=justify><FONT FACE="Times New Roman">I, Alan C. Thorne, Chief Financial Officer of </FONT><B>Aspen Group Resources Corporation, </B>certify that:</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; font-size:11pt" align=justify>1.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 <I>Certification of Disclosure in Issuers' Annual and Interim Filings) </I>of Aspen Group Resources Corporation (the <B>&quot;Issuer&quot;) </B>for the period ending December 31, 2005;</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; font-size:11pt" align=justify>2.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; font-size:11pt" align=justify>3.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt" align=justify>Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the annual filings; and</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; font-size:11pt">4.</P>
<P style="line-height:13pt; margin:0pt; text-indent:36pt; font-size:11pt">The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the Issuer, and we have:</P>
<P style="line-height:13pt; margin-top:11.55pt; margin-bottom:-13pt; padding-left:68.4pt; text-indent:-36pt; font-size:11pt" align=justify>(a)</P>
<P style="line-height:13pt; margin:0pt; padding-left:68.4pt; font-size:11pt" align=justify>designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared; and</P>
<P style="line-height:13pt; margin-top:13.2pt; margin-bottom:-13pt; padding-left:68.4pt; text-indent:-36pt; font-size:11pt" align=justify>(b)</P>
<P style="line-height:13pt; margin:0pt; padding-left:68.4pt; font-size:11pt" align=justify>evaluated the effectiveness of the Issuer's disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the Issuer to disclose in the annual MD&amp;A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.</P>
<P style="line-height:normal; margin-top:13.2pt; margin-bottom:0pt; font-size:11pt" align=justify><B>DATED </B>March 31<FONT FACE="Garamond">, </FONT>2006</P>
<P style="line-height:13pt; margin-top:8.25pt; margin-bottom:0pt; padding-left:162pt; font-size:11pt"><B>ASPEN GROUP RESOURCE CORPORATION</B></P>
<P style="line-height:13pt; margin-top:8.25pt; margin-bottom:0pt; padding-left:162pt; font-size:11pt">&#147;signed&#148;</P>
<P style="margin-top:8.25pt; margin-bottom:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:162pt; font-size:11pt">Alan C. Thorne</P>
<P style="line-height:13pt; margin:0pt; padding-left:162pt; font-size:11pt">Chief Financial Officer</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
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</SUBMISSION>
